Marketing Analytics

PPT-4 (Marketing Activities Perspective Metrics)

Naveed Ilyas

Visiting Faculty
Institute of Business Management

Module 3:
Marketing
Activities
Perspective
Metrics
Ch - 4

Product and Portfolio Management

Outline
Trial, Repeat, Penetration & Volume
Projections
Growth: Percentage and CAGR
Cannibalization rate and fair share draw
rate
Brand Equity Metrics
Conjoint Utilities and Consumer
Preference
Segmentation and Conjoint Utilities

Introduction

Effective marketing comes from customer knowledge and

an understanding of how product fits customers needs.
Metrics in product and strategy planning.

Trial, Repeat, Penetration and Volume

Projections
When projecting sales for new products, marketers
typically use a system of trial and repeat calculations to
anticipate sales in future periods
Trial Rate

The percentage of a defined population that purchases or

uses a product for the first time in a given period

Trial, Repeat, Penetration and Volume

Projections

Schematic of Simulated Test Market

Volume Projections

Trial, Repeat, Penetration and Volume

Projections
Adjusted Trial Rate (%) = Trial Rate (%) * Awareness (%) * ACV (%)
Trial Population (#) = Target Population (#) * Adjusted Trial Rate (%)
Trial Volume (#) = Trial Population (#) * Units per Purchase (#)
Trial Volume (#) = Target Population (#) * [(80% * Definitely Buy (#))
(30% * Probably Buy (#)) * Awareness (%) * ACV (%)]
* Units per Purchase (#)

Trial, Repeat, Penetration and Volume

Projections

Trial, Repeat, Penetration and Volume

Projections

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Trial, Repeat, Penetration and Volume

Projections
Repeat Volume

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Repeat Buyers(#) = Trial Population (#) * Repeat Rate (%)

Repeat Volume(#) = Repeat Buyers (#) * Repeat Unit

Volume per Customer (#)* Repeat Occasions (#)

Repeat Volume(#) = [Trial Population (#) * Repeat Rate

(%)]* Repeat Unit Volume per Customer (#) * Repeat
Occasions (#)

Trial, Repeat, Penetration and Volume

Projections

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Growth: Percentage and CAGR

Percentage growth is the central plank of year-on-year
analysis.

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Growth: Percentage and CAGR

Same store growth rate !

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Growth: Percentage and CAGR

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Growth: Percentage and CAGR

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Growth: Percentage and CAGR

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Cannibalization Rate

Any company considering the introduction of a new

product should confront the potential for cannibalization.
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Cannibalization Rate

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Cannibalization Rate

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Cannibalization Rate

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Cannibalization Rate
Cannibalization is always an issue when a firm launches
a new product line that competes with its established line
Sometimes, even if cannibalization rates are significant ,
and even if the net effect on the bottom line is negative, it
may be wise for a firm to proceed with a new product
Reasons?

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Cannibalization Rate

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Cannibalization Rate

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Cannibalization Rate

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Fair Share Draw

A new product will capture sales from existing products in direct
proportion to the market shares held by those existing products

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Brand Equity Metrics

Brand name, logo, image and perceptions that identify a product
A brand comes to embody a promise
Premium & preference
Enter new markets

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Brand Equity Metrics

Brand Equity Ten (Aaker)
David Aaker
10 Attributes

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Differentiation
Satisfaction or Loyalty
Perceived Quality
Leadership or Popularity
Perceived Value
Brand Personality
Organizational Associations
Brand Awareness
Market Share & Price
Distribution Coverage

Brand Equity Metrics

Brand Equity Index

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Bill Moran
Brand Equity Index (I) = Effective Market Share (%) x Relative Price
(I) x Durability (%)

Effective Market Share is a weighted average. It represents the

sum of a brands market shares in all segments in which it
competes, weighted by each segments proportion of that brands
total sales.

Thus, if a brand made 70% of its sales in Segment A, in which it

had a 50% share of the market, and 30% of its sales in Segment B,
in which it had a 20% share, its Effective Market Share would be
(0.7 * 0.5) + (0.3 * 0.2) = 0.35 + 0.06 = 0.41,or 41%.

Brand Equity Metrics

Relative Price is a ratio. It represents the price of goods sold under a given
brand divided by the average price of comparable goods in the market.
For example, if goods associated with the brand under study sold for $2.50
per unit, while competing goods sold for an average of $2.00, that brands
Relative Price would be 1.25, and it would be said to command a price
premium.
Durability is a measure of customer retention or loyalty. It represents the
percentage of a brands customers who will continue to buy goods under
that brand in the following year.

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Brand Equity Metrics

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Brand Equity Metrics

If relative price will go up, brand equity will go up as well ?
If effective market share goes up, brand equity will go up as well ?
If durability / loyalty goes up, brand equity will go up as well ?
FORMULA:
Brand Equity Index (I) = Effective Market Share (%) x
Relative Price (I) x Durability (%)

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Brand Equity Metrics

Brand Asset Valuator
Young and Rubicam , a marketing communication agency

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Brand Equity Metrics

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Conjoint Analysis
Measures consumer preference for an attribute level
This analysis can be performed on an individual level as well as
on a segment level
Conjoint Analysis: A method of estimating customers by assessing
the overall preferences customers assign to alternative choices.

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Conjoint Analysis

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Conjoint Analysis
A small phone for $100 has a partworth to customers of 1.6 (derived as 0.9 +
0.7). This is the highest result observed in this exercise.
A small but expensive ($300) phone is rated as 0.3 (that is, -1 + 0.7). The
desirability of this small phone is offset by its price.
A large, expensive phone is least desirable to customers, generating a
partworth of 1.6 (that is, (-1) + (-0.6)).
On this basis, we determine that the customer whose views are analyzed here
would prefer a medium-size phone at $200 (utility 0) to a small phone at $300
(utility 0.3).

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Conjoint Analysis
Such information would be instrumental to decisions concerning the
trade-offs between product design and price.
This analysis also demonstrates that, within the ranges examined, price is
more important than size from the perspective of this consumer.
Price generates a range of effects from 0.9 to -1 (that is, a total spread of
1.9), while the effects generated by the most and least desirable sizes
span a range only from 0.7 to - 0.6 (total spread 1.3).

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Conjoint Analysis
Compensatory versus Non compensatory consumer decisions

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Conjoint Analysis
Segmentation Using conjoint utilities

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Conjoint Analysis

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Assignment

Marketing Metrics: Ch 4
Case Study:
PV Technologies, Harvard Business
School

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Thank You
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